Anonymous web of companies controls 130 Victoria properties

Marina Riker By Marina Riker

Feb. 11, 2018 at 8 a.m.

Yellow open signs are displayed in the windows of the Victoria Charity Center at 1411 Port Lavaca Drive. The building is home to two nonprofits that reported a combined income of $40 million over the past decade

Yellow open signs are displayed in the windows of the Victoria Charity Center at 1411 Port Lavaca Drive. The building is home to two nonprofits that reported a combined income of $40 million over the past decade   Angela Piazza/ for The Victoria Advocate

Kristi Perez returned to Victoria after evacuating before Hurricane Harvey, only to find all of her family's belongings were missing and another tenant had moved into her apartment.

"It was our home," Perez said during an interview in October. "And then come to find out, they just threw all our stuff out and moved other people in."

The mother of two was among four tenants who sued Crossroads Apartments in Victoria, accusing the landlord of wrongfully evicting families and taking their belongings. But the case was dismissed when the property owner, an anonymously owned company based in Dallas, reached a private settlement with the tenants, according to court records.

• RELATED: Legal dispute ties up Bloomington water board

This is not the first time there have been problems at the Crossroads Apartments, a complex known by law enforcement for criminal activity and as a last resort for desperate renters. Neither credit checks nor deposits are required to live there, and rent can be paid by the week, according to tenants.

Although it's unclear exactly who owns or profits from the apartments, a Victoria Advocate investigation revealed the Crossroads Apartments are associated with almost 130 other properties in Victoria County, which altogether were recently appraised at more than $9.7 million, according to county records.

The properties are owned and connected with a tangled web of nonprofits and anonymously owned companies, some of which are not based in Victoria.

The owners of the companies aren't listed on government documents. Meanwhile, the nonprofits don't have websites, nor did telephone numbers listed on tax documents reach their representatives when called multiple times by the Victoria Advocate. The nonprofits' representatives could not be reached in person either.

Despite the lack of transparency, two of the nonprofits - ALMS and Volunteers of Victoria - reported a combined revenue of more than $40 million between 2007 and 2016, according to tax documents. During that time, they filed tax forms stating they spent a combined total of about $17.5 million providing free and low-income housing.

But some local nonprofit leaders and housing advocates said they weren't aware of anyone who received free housing.

Local and state housing authorities who oversee affordable housing programs regulated by the federal government said they couldn't recall working with the nonprofits.

"I think if you profit from another person's misfortune, then there's a question about the morality," said Victoria County District Attorney Stephen Tyler. "If you are receiving tax benefits that you are not due, that's a form of fraud."

Lack of oversight

Victoria County's district attorney said his office doesn't have staff trained in investigating white-collar crime. In general, he prosecutes cases after a law enforcement agency has conducted an investigation, he said.

A spokeswoman at the Texas Office of the Attorney General, which investigates nonprofit fraud, said she couldn't comment on specific cases.

A spokesman at the Internal Revenue Service said he could not comment on individual taxpayers.

Across the globe, anonymously owned businesses can be used for legitimate reasons, such as holding money or assets, even if they don't have active business operations. But those businesses - which are commonly called shell companies - also can be used for nefarious activities like money laundering or to hide who the owners are from law enforcement agencies.

Attorney won't name client

In Victoria, it's unknown who runs the nonprofits or nearly half-dozen companies, some of which are represented by businesses that can be hired to create companies for owners who want to stay anonymous.

Even the attorney of one of the nonprofits, known to residents as ALMS, didn't say who the person in charge was - despite currently representing ALMS in a lawsuit against a local water district.

"I'd have to get you a name, and I'm not trying to be evasive," said ALMS attorney Bernard Klimist, of Victoria. "Honest to God, I haven't been keeping up on it."

During an interview conducted a day later, Klimist said the nonprofit recently stopped providing charitable services and wasn't managing property rentals anymore.

According to tax documents, ALMS' mission is to "provide free clothing, food and shelter to the impoverished."

Klimist didn't say exactly when the services were stopped and said tax documents hadn't been updated to reflect the changes yet.

He would not identify whom he worked with at the nonprofit and said the board president recently resigned. When asked if he would allow the Victoria Advocate to interview his client, he said, "If they ask me, I'd tell them no."

Klimist said the nonprofit and associated companies operate legally and have been extensively audited, but he didn't say by which governmental agencies. He didn't provide documentation for the audits either.

"These companies, these properties, ALMS have been audited into the ground by everybody - from law enforcement to everybody," Klimist said. "They have been audited, every record has been gone over and nothing - because there's nothing to find."

No one will answer

The Victoria Advocate made multiple attempts to contact representatives of the nonprofits by phone and in person. When the Victoria Advocate called the phone number listed on ALMS' tax documents, the phone was answered on two occasions as "weekly rentals."

During one phone call, the person who answered the phone, who would not be identified, said the number was not related to a charity.

When the Victoria Advocate visited the address listed on the nonprofits' tax documents - a building with a purple, hand-drawn sign that read "thrift store" on 1411 Port Lavaca Drive - the doors were locked.

The door was answered by Ruben Gonzales, a former member of Bloomington's water board who was indicted last year for allegedly lying about being a felon on his election application. Gonzales, who pleaded guilty to fatally stabbing a man in the 1980s, is not listed on the nonprofits' tax forms as an employee. When a Victoria Advocate reporter asked to speak with the nonprofits' representatives, Gonzales told her to leave the property.

Bloomington battleground

ALMS is known by some residents as the property manager of dozens in Bloomington, one of the poorest parts of Victoria County. Many of the apartments are rented for between $140 and $190 a week and have just one room, a microwave and a mini-fridge, according to outreach workers.

According to Klimist, ALMS managed rental properties in the rural community that are owned by other private companies.

Some of those companies were sued when property taxes weren't paid on time. Since 2007, the county has filed at least 14 tax lawsuits, in which at least three nonprofits, five companies and more than a dozen individuals were named in one or more of the cases.

At least four of the five companies named in lawsuits were registered to corporate service companies, which are businesses that can be hired to create and manage companies for owners who don't want to be identified.

One of those companies, which dissolved in 2015, was based in Nevada - one of three states, along with Wyoming and Delaware known as havens for business owners who wish to remain unidentified, according to experts.

"The reason that Nevada is frequently used for shell companies is that their reporting and disclosure requirements are minimal," said Mason Wilder, of Association of Certified Fraud Examiners. "So it helps with anonymity in ownership of businesses, assets. . It helps with anonymous financial dealings."

Wilder would not comment on specific cases but said shell companies are used across the globe to conceal business owners and assets or help individuals avoid taxes.

In recent years, the use of shell companies made international headlines after the Panama and Paradise Papers were released. These massive leaks of financial documents revealed how politicians, celebrities and other wealthy people concealed money to avoid paying taxes in companies held offshore.

In the U.S., shell companies are legal and can be used for legitimate business reasons, Wilder said. But they also can be abused for tax evasion and money laundering.

"A major red flag for shell companies or fictitious businesses is if they don't have a web presence at all, no website or a very unprofessional website," Wilder said.

Another sign is if multiple companies are registered to the same address or have fewer than five employees, he said.

"Those are the kinds of things that fraud investigators look for to determine the legitimacy of a business," Wilder said.

Victoria attorney Klimist said last fall that ALMS does not have any employees; it uses only contract workers.

When asked in January why the nonprofit would operate with so many entities, Klimist said it was solely for legitimate management and tax reasons.

"I can give you the name of a dozen developers in town who are well-respected businessmen who have 15 different LLCs and businesses," Klimist said. "I mean, that's just normal business practice."

He said that "every one" of the entities had been audited by the "appropriate people." He did not provide documentation for the audits.

"There is no hidden company that is running money through," Klimist said. "It has all been audited."

'We got them cornered'

In late summer 2017, the network of nonprofits and companies owed about a half-million dollars in delinquent taxes, according to a tax attorney hired by Victoria County.

The complex web, however, made the legal process complicated for the county's attorneys to collect the tax money. When the county would sue one company, it would transfer the land to a new owner, said Steven Saucedo, who works at the firm hired by the county.

"So they had the ownership at XYZ corporation, and we'd sue them," Saucedo explained. "Well then, they'd switch ownership to somebody else, and we'd have to include that new ABC corporation (in the lawsuit)."

Eventually, the attorneys tracked down dozens of related accounts, he said.

"We got them cornered, and we got everything paid," Saucedo said.

But the shell companies weren't the only targets in the county's lawsuits. One of the individuals named in two of the tax lawsuits is Laura Klimist, the wife of the nonprofit's attorney. She was listed as lien holder for one of the properties that wasn't current on property taxes.

According to property records, Laura Klimist sold a property that was part of her father's estate to Martha Vasquez, who is listed as the board president of ALMS and another nonprofit. Klimist also provided $125,000 in financing, which has since been paid back, according to county records.

The property that was sold, located at 1411 Port Lavaca Drive, became the headquarters for ALMS and another charity, according to tax documents.

But Bernard Klimist said he and his wife didn't know that the buyer, whom Klimist said he's known for more than 30 years, planned to turn the property into the charities' center.

Klimist said his wife was involved only as the lien holder. Tax attorneys usually name both property owners and lien holders in lawsuits.

"The only reason her name came up is she was the executor . of this estate and the lien holder," Klimist said. "There was nothing else."

The rental program

In Victoria, the lack of transparency surrounding rental properties has sometimes caused problems for tenants.

Before filing the lawsuit in October 2017, tenants at the Crossroads Apartments and their attorney made repeated attempts to reach the property owner - including hand-delivering letters and mailing certified ones, according to a news release from Texas RioGrande Legal Aid. But it proved difficult to reach the owner, a company registered to an address in Dallas.

Despite the lack of transparency surrounding the apartments' owner, some of its tenants said they paid rent to ALMS. Before her case was dismissed last fall, Yvonne Brazil, a tenant who sued the apartments, said she paid rent via money order - $170 per week - made out to ALMS for the apartment she shared with her boyfriend and two children.

Perez, another tenant in the lawsuit, said she also paid her rent by money orders written to ALMS.

"Basically if you don't pay your rent, they bolt your door, and they will throw everything out that day," Perez said during an October interview.

Neither tenant would return requests for comment after the case was dismissed.

Klimist, who represents ALMS, said he also represented the owner of the Crossroads Apartments when the tenants sued. He said the lawsuit was settled quickly because it was a misunderstanding, and the tenants got their belongings back.

"I got a call from the manager over at Crossroads, and I don't know who it was," Klimist said. "A lot of times - and I know it sounds flippant - attorneys, we don't ask."

Klimist also said ALMS and the Crossroads Apartments were unrelated - even though the nonprofit's headquarters and apartments are owned by the same company, according to property records.

In late January, a sign outside the apartments' rental office said it was under new management, and a note inside the office instructed tenants to pay rent to S. R. Inc. - a name that doesn't belong to an active business in Texas, according to the state.

But that same day, county records show ALMS started the legal process to evict a tenant renting a home in Bloomington. On the form filed with the county, the landlord's address was listed as 1610 N. Laurent St. - known as the rental office of the Crossroads Apartments.

Meanwhile, business records show paperwork for the company that owns the apartments was signed by Martha Vasquez, who is listed as president of the nonprofit ALMS. Vasquez did not return multiple requests for comment, including phone calls and hand-delivered notes.

$6 million for free housing?

Although Klimist argues Crossroads Apartments and ALMS are unrelated, he said ALMS did manage properties in Bloomington. Many of the units, which are operated like motels, were built in the midst of an oil boom, when dozens of transient workers flocked to the region.

But nowhere in ALMS' tax documents is there any mention of a rental property program. Instead, the nonprofit's mission is to "provide free clothing, food and shelter to the impoverished," according to tax documents.

Between 2007 and 2016, the nonprofit filed tax documents stating it spent more than $6 million providing free housing. Tax documents for 2017 aren't available yet.

In the aftermath of Hurricane Harvey, Klimist said the nonprofit provided emergency housing to more than 100 people who sought shelter after their homes were damaged. Klimist would not provide data on how long residents stayed, nor would he disclose where shelters were located.

Housing advocates can't confirm it either.

An email from an ALMS representative shows the nonprofit offered two homes in Bloomington to be used as shelter. But leaders of local charities overseeing recovery efforts after Hurricane Harvey said ALMS wanted contract terms that weren't feasible, according to their officials.

Other than this offer of the two units, local nonprofit leaders said they don't know of anyone who has received free housing in recent years. Meanwhile, officials who work for the Victoria Housing Authority, which oversees low-income housing programs, said they couldn't recall working with the nonprofits.

Kim Pickens, who advocates for the homeless, said she wasn't aware of anyone who took part in a free housing program while she served as president of Victoria's homeless coalition for four years.

"It's not something they publicize," Pickens said.

Instead, ALMS runs apartments more like motels than traditional long-term rentals, Pickens said. Most tenants pay by the week and aren't given the same rights as tenants who have conventional leases, she said.

If people don't pay on time, they can end up homeless, she said. She recalled one instance when she spoke with a man whose employer was late giving him his check, so he was kicked out on Easter weekend because his rent was late, she said.

"I know a lot of people who have become homeless because of the way they do things," Pickens said.

That was all too real for Yvonne Brazil, one of the tenants who sued Crossroads Apartments. During an interview Oct. 19, Brazil said she hated losing all of her belongings - especially family photos.

Even though it was small, the Victoria apartment was her family's home. But her family had nothing left after the landlords removed their things, so Brazil, her boyfriend and her 7- and 15-year-old children were better off starting a new life in a new city, she said.

"We were feeling hopeless. . We're homeless now."

For related ALMS coverage, please see:

-- Nonprofit leaves people lost after Harvey

-- Nonprofit claims bias from water district

-- Water district, nonprofit developer agree to seek settlement

-- 140 man hut development halted

-- Rangers investigate election of convicted murderer

-- Victim's family, landlord at odds about smoke alarms in fatal fire

-- Victoria mom sues landlord for son's death



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